To answer the second question first, no, I don't think it's an effective way of dealing with human rights issues that there be some sort of fine. I find it rather appalling.
In terms of the free trade agreement, as to whether that will benefit or somehow reward corporations if they were to become involved in human rights abuses, I think it depends on what type of agreement you negotiate. If it's the typical agreement with the typical investment provisions that have no obligations on corporations, then yes, it will reward them. If you actually include very stringent but minimum obligations on corporations not to become complicit in egregious violations of human rights and to screen their security forces and this sort of thing, then it may not.
I'm not advocating for or against the free trade agreement; I'm just saying it depends on what type of agreement you have.